President Trump on Wednesday unveiled a tax cut proposal that would cap the tax rate for businesses who file their taxes through their owners’ personal income tax, such as owner-operator truckers, at 15 percent. The plan would remove the existing percentage brackets of 25, 28, 33 and 39.6 for higher-earning owner-operators.
It’s unclear how many single-truck owner-operator businesses would be affected by the tax cut, as many owner-operators already are in or below the 15 percent bracket.
However, the plan would also cut taxes for lower-income earners. Trump’s plan, according to a brief outline released by the White House, would double the individual deduction, meaning those earning less than $24,000 a year would pay no income tax and those making more than $24,000 wouldn’t pay any taxes on the first $24,000 earned. Other details on the plan were sparse. The administration says it is engaging Congress to flesh out full details and brackets.
Todd Amen, president and CEO of owner-operator financial services firm ATBS, said in a sample of 1,800 owner-operator clients, the average federal income tax rate was 10.8 percent. That indicates many owner-operators wouldn’t benefit from the 15 percent cap.
The plan also caps corporate tax rates at 15 percent. Treasury Secretary Steve Mnuchin on Wednesday when announcing the plan said the goal of the proposal is to simplify the U.S. tax code and the filing system and to spur economic growth.
Trump’s plan will likely face an uphill battle in Congress, though at least it could serve as a starting point for tax reform efforts. The White House and Congressional leadership have said tax reform is a key priority while Republicans control both chambers of Congress and the presidency.
Critics of the plan say it does not institute new mechanisms to make up for the loss of tax revenue for the federal government. Others have noted the plan would allow Trump to cut his own tax bill by millions of dollars because he files his taxes on his extensive business holdings through his personal income taxes.
Trump says the plan accounts for revenue losses by eliminating deductions and loopholes for “the very rich,” but his plan does not mention specifically what he plans to remove. The plan also touts a one-time repatriation tax of 10 percent on cash held overseas as a means to make up for lost tax revenue and to encourage domestic investment.
–Todd Dills contributed to this report.
